IDEAS FOR TAXING THE RICH
June 2, 2019 - Douglas Myser
Ideas for taxing the rich. It's no accident that the Democratic Party went from wanting a 39.6 percent top tax rate to wanting much more. The 1990's Democratic Party made friends with the rich. The 2008 Democratic Party was eager to bail them out. The 2019 Democratic Party seems ready to declare war. In just the past few months, at least three major Democratic Party figures, two of whom are presidential contenders, have proposed large tax increases targeted at the richest Americans. Rep. Alexandria Ocasio-Cortez (D-NY) floated a big increase in top marginal income tax rates in an op ed published and made available to all to see. Bernie Sanders has proposed a drastic rate hike in the estate tax. Ideas for taxing the rich.
The Democratic urge to tax the rich isn't a wholly new development. In the 2016 general election, Hillary Clinton embraced Sander's proposal for a 65 percent top estate tax rate, and both Bill Clinton and Barack Obama were able to raise the top income tax rate by a few points. But Sanders, Warren, and Ocasio-Cortez's proposals are significantly more ambitious; Warren, for instance, is proposing a kind of tax the federal government has never imposed before, breaking totally new ground. Right now these are somewhat disjointed proposals that don't add up to a coherent picture of how the tax system ought to look: Ocasio-Cortez's, especially, was dashed off int eh course of an interview (though it got debated as if it were a carefully constructed white paper.)
But over the 2020 primary and in the new majority-Democratic House, we should expect these ideas to start to harden into a broader agenda for dramatically raising IRS rates on top earners. At the end of the process, the Democratic Party is likely to wind up with a much more aggressive party consensus on taxes than has prevailed since the 1980s. This isn't a change that came out of nowhere. It comes out of a growing dissatisfaction with the timidity of Democratic efforts to tax the rich in the Clinton and Obama eras, and a growing intellectual trend in economics that has given a sound basis to tax plans that soak the rich. If you find yourself with a tax bill you didn't expect, call this 35 year old Tax Resolution Services firm for options on how to deal with debt, including, but not limited to, the IRS Fresh Start Program. Tax Relief comes in many forms, and you need to explore every option to make the right choice.